The Scot-Government is set to create a long-term competitive advantage for its oil and gas supply chain by investing £100,000 in China’s emerging carbon capture and storage (CCS) sector.
The Scottish Government and its main economic development agency are contributing £50,000 each towards the project. This will help Scottish research institutions and businesses to engage in this emerging Chinese market.
Supporting the UK-China (Guangdong) Centre will help to establish a CO2 capture test site at the Haifang coal-fuelled power plant, as well as a pre-front end engineering and design study to build CO2 capture, transport and storage technology at a newbuild 8 GW coal-fired power station in the province of Guangdong.
Guangdong is an engineering and manufacturing powerhouse for China and relies largely on coal-fuelled electricity. The proximity of offshore oil and gas fields is expected to provide abundant opportunities for the storage of CO2 – as the North Sea does for Scotland.
This offers opportunities for the service sector and oil and gas operators – especially those which have already gained expertise in the UK’s CCS Commercialisation competition or are engaged in current commercialisation projects.
Scottish Energy Minister Fergus Ewing, explained: “China is one of the world’s largest energy producing and consuming countries. As a proportion of the world’s atmospheric emissions, it releases over a quarter of the total emissions of carbon dioxide – and this trend is rising. As a result, China is facing increased pressure to reduce its CO2 emissions.
“Scotland’s energy industry is a recognised leader and is proven to work in partnerships around the world. Forty years of oil and gas production has created a strong supply chain, a skilled workforce, a renowned academic sector and well-developed energy infrastructure. These skills can be readily transferred to the carbon-capture industry.
“Scotland is at the forefront of CCS and CO2 enhanced oil recovery research, and we are looking to strengthen Scotland’s co-operation with China.”
Scottish Enterprise’s head for oil and gas, David Rennie, added: “Providing early support to China on its carbon-capture journey will help put Scotland firmly in the limelight for future opportunities. It will provide us with new connections in the Chinese energy industry, enabling us to demonstrate our world-renowned industry and academic expertise in the oil and gas sector.”
A steering group involving Scottish Enterprise, the Scottish Government and academics from the Scottish Centre for Carbon Capture and Storage (SCCS), will ensure Scotland’s financial contribution is spent in areas which will highlight the Scottish supply chain’s expertise, whilst working in collaboration with the UK-China (Guangdong) CCUS Centre.
China has already undertaken some 20 demonstrations and pilot projects of CCS technology, and is expected to include a strong commitment to practical CCS construction in its next five year plan.
SCCS team leader, Philippa Parmiter, said: “China is a major and rapidly expanding market for CCS and we expect this strong growth to continue in the coming years. Our link with Guangdong enables us to build relationships and jointly develop CCS opportunities in a region with many similarities to Scotland.”
Secretary General of UK-China (Guangdong) CCUS Centre, Xi Liang, said: “The collaboration between Scotland and UK-China (Guangdong) CCUS Centre would be a great opportunity for cost reduction in CO2 storage and for establishing a global CCUS supply chain. I appreciate the early support of two Scottish institutes to the Guangdong CCUS initiative in July 2013, SCCS based at University of Edinburgh and Howden Group based in Glasgow.”
China offers many opportunities to grow Scotland’s oil and gas sector, from which 12 companies participated in the Scottish pavilion at China International Offshore Oil & Gas Technology Conference in Peking – one of which was Surface Active Solutions Ltd.
The Livingston-based company – which provides chemical products to oil service providers primarily for cleaning drilling mud – has been active in China for the last three years.
Managing Director John Harrison, said: “This is our second visit to CIOTC. Our initial visit resulted in a deal to set up a local distributor to service the industry. Our Initial sales have been achieved through the distributorship agreement and we are now looking to build on this success.”
Meanwhile, China has been increasing its oil and gas investment in Scotland during the past few years – CNOOC’s acquisition of Nexen, Sinopec’s 49% share in Talisman Energy (UK)’s North Sea business and PetroChina’s 50% ownership of the Grangemouth oil refinery – a real indication of the huge potential in oil and gas co-operation between China and Scotland.